Written by: Jameson Pasek
In the past decade, there has been a marked uptick in antitrust litigation, driven by
aggressive enforcement actions by the U.S. Department of Justice and the Federal Trade
Commission, as well as a surge in private follow-on suits.[1]
These suits often target entire industries, including technology platforms, healthcare
providers, financial services and consumer goods, yielding exposure that easily reaches into
the billions.[2] Yet an underexplored dimension of this litigation boom lies not in the
antitrust allegations themselves, but in the insurance coverage battles they trigger. Most directors and officers, or D&O, and commercial general liability policies contain express exclusions for antitrust or unfair competition claims.[3]
However, plaintiffs have adapted their pleadings. Alongside Sherman or Clayton Act counts,
they now routinely include claims for breach of warranty, product liability or violations of
state consumer protection statutes. In my practice in the last few months, we have noticed
an uptick in these types of claims.
These alternative pleadings may escape the antitrust exclusion’s reach, thereby obligating
insurers to defend, and sometimes indemnify, policyholders in lawsuits that are
substantively antitrust disputes. This trend has fueled parallel litigation between insureds
and their insurers, with courts tasked to determine whether ancillary claims are truly
independent or merely derivative of antitrust allegations.
Antitrust Exclusions in Liability Policies
The proliferation of antitrust exclusions in liability insurance policies is not accidental.
These exclusions became common in the early 2000s, after waves of treble-damages class
actions exposed insurers to massive liabilities, including In re: Vitamins Antitrust Litigation,
which resulted in more than $1 billion in settlements for alleged price-fixing in the nutrition
markets, and In re: NASDAQ Market-Makers Antitrust Litigation, which produced
settlements exceeding $900 million in claims of collusion among securities dealers.[4] Their purpose is to carve out high-exposure competition claims, such as price-fixing,
monopolization and bid-rigging, from policies designed to insure ordinary business risks.
Despite their prevalence, antitrust exclusions vary in breadth. Some apply only to violations
of federal antitrust laws, while others extend broadly to “unfair trade practices,” “unfair
competition” or “deceptive acts,” language that can potentially sweep in warranty,
consumer fraud and misrepresentation claims.
Courts diverge in interpretation.[5] Some construe exclusions narrowly against insurers,
applying them only to classical antitrust statutes. Others apply them expansively, finding
consumer protection or unjust enrichment claims “inextricably intertwined” with antitrust
allegations.
Strategic Pleading by Plaintiffs
Plaintiffs counsel increasingly draft their complaints with an eye toward insurance coverage.
By including warranty, consumer fraud or unjust enrichment claims, they both diversify
their legal theories and increase the likelihood that insurers will be compelled to fund a
defense.
For example, a manufacturer that conditions its warranty coverage on the use of branded
replacement parts may face allegations of unlawful tying under Section 2 of the Sherman
Act, but the same facts can also be cast as a breach of warranty under the Uniform
Commercial Code as was the case in the U.S. Supreme Court’s 1992 decision in Eastman
Kodak Co. v. Image Technical Services Inc.[6]
Similarly, in pharmaceutical antitrust cases involving reverse payment schemes, plaintiffs
often add claims under state unfair trade practice and consumer fraud statutes.[7] These
counts are not always expressly covered by federal antitrust exclusions and therefore open
the door to coverage disputes.
The inclusion of such claims materially alters the litigation landscape. Ancillary counts
complicate insurers’ reliance on exclusions, create leverage for plaintiffs since defendants
with coverage are more likely to settle, and drive coverage litigation as courts are forced to
decide whether the alternative claims are independent or simply antitrust claims in disguise.
Duty to Defend and Mixed Claims
The duty to defend is broader than the duty to indemnify. Under the majority rule, if any
claim in a complaint is potentially covered, the insurer must defend the entire action.[8]
Thus, even when a complaint contains antitrust counts plainly excluded by policy language,
the presence of a single arguably non excluded count, such as a warranty claim, can obligate
insurers to fund the defense of the whole suit. Insurers resist this outcome by arguing that ancillary claims are merely repackaged antitrust theories and should therefore be excluded wholesale.
As discussed below, courts have split on the proper approach. Some courts adopt a
functional analysis, asking whether the factual allegations underlying the ancillary claims
are independent of the antitrust counts. Others take a formal pleading approach, obligating
the insurer to defend so long as the legal label of the claim suggests potential coverage.
Illustrative Case Studies
Last year’s decision in Beazley Insurance Co. v. Foster Poultry Farms illustrates how courts
sometimes collapse ancillary claims into the scope of an antitrust exclusion.[8] Foster was
sued for unjust enrichment and consumer protection violations in addition to federal
antitrust claims. Foster argued that the unjust enrichment and consumer protection claims
were distinct from the antitrust claims and should not fall within the exclusion.
The U.S. District Court for the Eastern District of California disagreed, concluding that the
unjust enrichment claims were derivative of and entirely dependent upon the antitrust
allegations, and that the consumer protection claims likewise tracked the antitrust
conspiracy. The exclusion was held to apply in full, precluding coverage.
In contrast, the U.S. Court of Appeals for the Tenth Circuit’s December 2024 decision in
Allied World Specialty Insurance Co. v. Blue Cross & Blue Shield of Kansas Inc.
demonstrates how ambiguities in policy drafting can preserve coverage.[9]
Blue Cross faced antitrust claims alleging underpayment of providers, overcharging
subscribers and territorial restrictions. The policy at issue both expressly covered certain
antitrust claims and excluded “managed care activities.” The insurer denied coverage, citing
the exclusion. The U.S. District Court for the District of Kansas agreed, but the Tenth Circuit
reversed.
The panel held that because the policy both provided and excluded coverage for related
conduct, it was ambiguous, and ambiguities must be construed in favor of the insured. The
court further held that some of the claims in the underlying action were sufficiently distinct
from earlier litigation that the related-claims provision did not necessarily bar coverage. This
case underscores that conflicting policy provisions will often be resolved in favor of
policyholders.
Implications for Policyholders and Insurers
For policyholders, the recent case law demonstrates that coverage may be available even in
antitrust-heavy disputes, depending on how claims are pled. Insurers’ broad exclusion
arguments should be contested, and policyholders should resist efforts to recharacterize
alternative pleadings as merely antitrust in nature.
For insurers, the trend underscores the importance of precise drafting. Exclusions limited to
“antitrust” may be circumvented by creative pleading, while broader exclusions referencing
“unfair competition” or “unfair trade practices” reduce ambiguity but risk challenges as
overbroad or unconscionable. Where policies simultaneously provide coverage for certain
competition-related risks and exclude them in another provision, courts are likely to
construe the language against the insurer.
Conclusion
The surge in antitrust litigation has not only reshaped competition law but has also exposed
fault lines in insurance coverage. When complaints extend beyond the contours of the
Sherman and Clayton Acts to include warranty, consumer protection or product liability
theories, courts must decide whether those claims stand independently or collapse into
antitrust exclusions.
For insurers, the path forward is vigilance. Precision in drafting, discipline in defending and
persistence in pressing functional arguments are critical to ensuring that exclusions operate
as intended. The stakes are high, but so too is the opportunity for insurers to shape the
contours of coverage law in their favor.
Jameson Pasek is director of the litigation practice at Caldwell Law.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] U.S. Dep’t of Justice, Antitrust Division, Workload Statistics FY 2015–24 (2024)
(government data on enforcement trends).
[2] In re: Google Digital Advert. Antitrust Litig., 721 F. Supp. 3d 230 (S.D.N.Y. 2024),
appeal dismissed, No. 24-874, 2024 WL 4491699 (2d Cir. Aug. 28, 2024).
[3] Kenneth S. Abraham, Insurance Law and Regulation (6th ed. 2020) (textual authority
on exclusions).
[4] In re: Vitamins Antitrust Litigation, 209 F.R.D. 251 (D.D.C. 2002); In re: Nasdaq
Market-Makers Antitrust Litigation, 187 F.R.D. 465 (S.D.N.Y. 1998).
[5] Compare Contl. Cas. Co. v. Duckson, 826 F. Supp. 2d 1086 (N.D. Ill. 2011) (construing exclusion narrowly and declining to extend it to securities and fiduciary duty claims) with Med. Mut. Ins. Co. of Maine v. Indian Harbor Ins. Co., 583 F.3d 57 (1st Cir. 2009)(holding consumer protection claims inseparable from antitrust conduct and thus excluded).
[6] Eastman Kodak Co. v. Image Tech. Servs. Inc., 504 U.S. 451 (1992) (tying
arrangements and aftermarket parts/warranties as Sherman Act § 2 violations).
[7] Fed. Trade Comm’n v. AbbVie Inc., 976 F.3d 327 (3d Cir. 2020) (reverse-payment
antitrust litigation involving overlapping consumer protection claims).
[8] Beazley Ins. Co. Inc. v. Foster Poultry Farms, 746 F. Supp. 3d 828 (E.D. Cal. 2024).
[9] Allied World Specialty Ins. Co. v. Blue Cross and Blue Shield of Kansas Inc., No. 23-
3130, 2024 WL 4969268 (10th Cir. Dec. 4, 2024).
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